Contract Law: Formation, Obligations, and Types of Contracts Report

This report provides a comprehensive overview of contract law, beginning with an introduction to contract formation and its essential elements such as offer, acceptance, intention to create legal relations, and consideration. It delves into various types of contracts, including face-to-face versus distant contracts, unilateral versus bilateral contracts, and written versus verbal contracts. The report then explores different types of contractual terms, including expressed terms (conditions, warranties, and innominate terms), implied terms, and exclusion clauses. The second part of the report provides a practical application of contract law by drafting a contract for the purchase of shampoo, and it discusses the implications of breach of contract and the legality of exemption clauses. The report references a case study involving the sale of a web camera to illustrate the application of legal provisions related to contract formation. The report covers contract law, exploring contract formation, obligations, and types of contracts.

ASPECTS OF
CONTRACT

INTRODUCTION
Expanding boundaries of business units and complex business scenarios are demanding
effective knowledge of legal complications within the economy. Contracts and contractual
liabilities are some of the basic legal knowledge which helps the business units in enhancing
growth measures efficiently (Cartwright, 2011). Formation and operations of business contracts
helps an individual in working and operating business in an effective measure. Current report
provides a deep insight about contract formation and its operating within the business unit. It
discusses about the obligations and relationship associated with contract and negligence in
business.
1.1
Contract is a legal document which binds the parties associated with it, in contractual
obligation. It is defined as a lawful agreement between more that one party which binds them
into contractual obligations of performance of the contract. Converting agreement into a contract
demands few essential elements which are discussed henceforth. Offer: This is the expression of willingness to develop a contract on the basis of specific
terms and conditions with another party(s). The offer is a clear representation of
willingness of one party to the other. The offeror represents his/her offer to the offeree
with the intension to develop a contractual obligations as per the mentioned terms and
conditions (Gray, 2010). If the offeree modified the terms and conditions of the offer it
nullifies the previous contract and is termed as a counter offer. Acceptance: This is the expression of consent by the parties for the specific terms and
conditions of the contract. This helps the business unit in creating an effective impact on
contractual liabilities of the terms and conditions of contract (Howells, 2011). The
acceptance of the offer is suppose to be in the given time frame because revocation of
offer nullifies the initial offer however if the offer is revoked after the implied acceptance
of the party, the offer becomes void. Intension to create legal relation: This is a very significant element of valid contract. It
states that the parties involved in the contract must have a intension to develop legal
agreement. The contract developed for conditions which are not legally appropriate
nullifies the contract. Moreover the parties involved in the contract must have a free will
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to enter into the contract and that no external force or persuasion must be applied for
them to develop the contractual obligation (Koffman and Macdonald, 2010). For example
if A pressurizes B to sign a doctrine of contract to sale a valuable antique then the court
of law will nullify the contract if B is able to prove that contract lacked the element of
intension. Consideration: This is one of the most significant element of the contract. According to
this the parties involved in the contract are accustomed to gain something of value in
return while developing a contract (Rosen and et.al., 2009.). For example if party A and b
develops a contract for sale of good then seller will gain money or exchange value and
buyer will gain the product as a consideration thus this is a very important concept of
contractual obligation.
Case reference
As per the given case James advertised a web camera for sale on a e-commerce site for ₤
55. Maria responded for the email by showing her willingness to buy the product at ₤ 45. James
did not accepted it however due to lack of any other offers James was ready to accept Maria' s
price thus he wrote Maria showing his willingness.
Application of Legal provisions
As per the given case the contractual obligations which are attained for the parties are: Offer: As per the case James offered the web camera at ₤ 55 on e-commerce site. Maria
gave a counter offer for the same to James expressing her willingness to buy the product
at ₤45. Acceptance:On the basis of mentioned case Maria sis not accept James offer rather she
gave a counter offer for the same. James due to lack of rightful buyer ultimately accepted
Maria's counter offer as per her terms. Thus this clearly reflects acceptance of offer. Intention: The contractual obligations for the given case represents that the buyer and
seller has the rightful and legal intentions to develop the contractual obligation.
 Consideration: The consideration for the above case will be web camera for Maria and
₤45 for James.
Thus as per the above explanation the parties of the contract attained all the essential
elements of the contract thus the contract is considered to valid and effective.
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1.2
Contracts are various kinds and forms. These develops different extend of obligation and
condition for the parties. English law acclaims the following major types of contracts: Face to face and distant contract: These are the contracts which are developed between
two or more parties in the basis of presence. Face to face contracts are those which are
developed in the physical presence of the all the parties of the contract. The negotiation
of these contracts are deliberately carries and the final contract is developed in a limited
time frame (Stone and Devenney, 2013). Distant contract on the other hand represents
the contracts which are developed between the parties which are not or cannot be
physically gather to develop a contract and thus the contractual negotiation are carried
out on phone, through emails, letters or online conferences. As per the mentioned case
The contract between James and Maria is an effective example of distant contract which
was carried out by means of e-commerce site. Unilateral and bilateral contract: The former contract type is the one where the offerer
promises to carry out the obligation on the performance of the task. The associated
parties are free to carry out the terms and conditions of the contract. This contract is
generally from one party to wide or large group of people (Van der Puil and Weele,
2014). On contrary to this Bilateral contract is the specific contract which is developed
between the associated parties and specific negotiation if needed is carried out to develop
contractual obligations (Types of Contracts, 2015). As per the given case the contract
between James and Maria was a bilateral contract because it included the exchange of
promises where James promised to provide web camera and Maria promised to pay the
agreed amount for the same.
 Written and verbal contract: The written contract as the name suggest are those which
are developed between the parties involved in written form. The parties have a written
proof for these contracts thus terms and conditions could be easily referred or the same.
These contracts are generally developed for long term obligations (Tvarnø, 2010). Verbal
contract however are those which are developed between the parties through exchange of
words. No written proof is maintained by the parties here. These types of contracts are
generally short term contracts. For the given case James and Maria developed a written
contract as their negotiation was carried out through emails.
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1.3
The contractual obligations are developed on the basis of terms and conditions agreed
upon. The various types of terms which categorised the contracts are: Expressed terms: These are the terms which are explicitly expressed by the parties of the
contracts in written or oral form. The contractual obligations are developed and expressed
clearly in contractual deed (Treitel, 2002). This helps the parties in creating a definite
impact of the implication of the liabilities. The expressed terms are divides into 3 major
categories.
◦ Conditions: These are the primary terms of the contract. If these terms of the contract
are not attained then the contract is likely to end soon.
◦ Warranties: The are the secondary terms of the contract which specifies the
obligation of other party in case these terms are overrunned. In case these terms are
not attained by the parties then the innocent party may claim for the damages caused
but may not end the contract.
◦ Innominate terms: These are the terms which not fall in the either category. The
unfulfilled terms leads the other party to pay for damages.
 Implied terms: These terms are considered as the legal obligations of the company. These
are not expressed in words or verbally but the organization are oblige to fulfil them
(Tvarnø, 2010). For example in the mentioned case the implied terms of sales of goods
act demands :
 The seller must have the right to sell the product
 The product mus match its description
 The product quality must be satisfactory
 Exclusion clause:This term of the contract are those which are used by the parties yto
reduce the liability of other party. These terms may create an ineffective impact on the
contract is the exclusion clause in not included in appropriate manner and when the terms
of exclusion clause are non competitive.
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TASK 2
2.1 & 2.2
Contract is one of the crucial part of business law. The effective drafting of contract helps
the parties I clear and effective impact on legal obligations. The given case mentions that the
product of Bella UK, “miracle Oil” is concerned with rapid hair growth. The company has
developed exclusive product price for the product for a limited time frame. The contract
efficiently describes a flyer mentioning a limited half price offer for the product. The contract
drafting will be done as follows:
Contract for purchase of shampoo
Buyer's Name: Hair 4 U
Seller's Name: Bella UK
Address: xyz
Address: jkl
City, State, ZIP
City, State, ZIP
Phone: XXX XXXXX
Phone: XXX XXXXX
The Seller hereby conveys to the Buyer full ownership and title to the Miracle oil shampoo
bottle
The Buyer hereby agrees to pay the Seller ₤ 250 for 10 bottles of shampoo whose marked price
is ₤ 500 on 05/12/2015 .
The offer is limited time only. Results guaranteed (Rowlinson, 2014).
Both parties hereby agree that this is an "as-is" sale, with no warranties of any kind expressed or
implied.
The seller accepts no responsibility for any adverse results, the product has 20%
success
The contract is formulated for the consideration of Shampoo bottle which is named as Miracle
oil. In return of given this bottle seller will receive consideration in monetary terms.
Furthermore, all the laws of UK applies to the given contract.
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…............................................ …............................................
(Signature) (Signature)
….............................................. …..............................................
(Printed name) (Printed name)
….............................................. …..........................................
(Address) (Address)
…............................................. …............................................
(Date) (Date)
2.2
The report written to Mr Michel Hair, owner of Hair 4 U includes the following: Breach of contract: The breach of contract occurs when the parties of the contract are
unable to fulfill the specified conditions of the contract. If the any party of the contract is
unable to fulfill the terms and conditions implied in the contract then this will be treated
as breach of contract. The remedies which may help the individual for breach of contract
are damages which means that the parties may have to pay for the damages caused to the
other party (Robert, 2014). These damages may be indulged till the extent of non
compliance of the parties involved
 Legality of Exemption clause: Exclusion clause is generally termed as an inapproapriate
term included in the contract to reduce the liability of one party. Exclusion clause
however is a legal provision for the contract drafting. This is effectively treated and
considered as fair part of the contract under Unfair Terms in Consumer Contracts
Regulations 1999. The legal conditions of exclusion clause are:
 UTCA is applied in business to business situation
 No restriction regarding negotiation of contract is applied to UTCA terms.
 UCTA applies to exclusion of tortious liability as well
 UCTA provides specific instances of what may amount to an unfair term. If a term is not
within one of the specified categories it is not capable of amounting to an unfair term
under the Act.
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As per the given case the exclusion clause is efficiently added and represented in the
contractual deed. Moreover the implication of the same is visible and well understood by the
parties of the contract.
TASK 3
3.1
The contractual and Tot liabilities are the two similar terms however the application of
the two widely differs in terms of objectives, application and operations as well. The major
differenciation in the given terms are:
Basis Contractual liability Tort law
Relationship between
parties
This is applicable to the parties who
deliberately come together with
mutual consent to form a contractual
obligation (Whittaker, 2005).
This relationship is imposed by
law when the tourter is unable to
follow the duty of care and cause
damage to the other party
Nature of obligation The contractual obligation are
developed by the basic terms and
conditions mentioned in the contract
Here the obligations are imposed
by law and not agreed by the
parties involved. (Case
reference: Blyth v Birmingham
Water Works (1856))
Reason of occurrence These liability occurs due to non
compliance of the terms and
conditions
These occurs when the
individual or business is unable
to fulfill the principle of duty of
care due to negligence of the
party.
Basis of damages The damages caused to the party
when one party is unable to fulfill the
terms and obligations of the contract
(Negligence, 2015).
The basis of damages here
occurs due to negligence of one
party (McKendrick, 2014)
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3.2
Duty of care is one of the major and most crucial principle of tort liability. Duty of care
deals with complying to the safety and security of public due to ones activity and actions. This
principle was developed in the year 1932 due to occurrence of the case between Donoghue V
Stevenson (Middlemiss, 2011). According to this case Mrs Donogue claimed for the damages
when she caused personal injury while consuming ginger beer which contained a decomposed
snail in it. The claimant argued that the bottle was opaque and after consumption of half of the
content the decomposed snail emerged which caused her personal injury. She claimed for her
personal injury which was successful leading to establishing the principle of duty of care which
acclaims that negligence f duty may lead to legal implications.
3.3
As per the given case Alan hired Mathew to help him out with his business activities and
helps out Alan. Mathew was a minor and was helping Alan efficiently. While working for
delivering milking Alan one injured Mathew with his car. As per the case Mathew was hired
under wrong preposition and can sue Alan for his injuries. This is because it is the duty of Alan
to take care of the safety and security of Mathew thus Alan is liable for the damages caused to
Mathew.
On the other hand North folk farm cannot be held liable for this situation as the company
was totally unaware about Alan's recruitment whereby he hired Mathew to carry out his business
work. However as per the vicarious liability principles the employer is liable for ant actions
carried out the employees under any condition. Besides this, there are some conditions identified
in which businesses will be considered as vicariously liable for the wrong doing of their
employees act.
 There must be employer and employee relationship.
 The injury must be caused to worker during the course of employment (Marson, 2011).
As per the given principles North folk farm must be helps liable for its employees action.
TASK 4
4.1
To
Brad,
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Respected sir,
As per the given case it is evident that the Charles is fully liable to pay off the damages
caused to you. Here, due to the negligent act of solicitor award of damages is being awarded by
the court of law in the favor of disappointed beneficiary. The case clearly reflects that due to
false representation of Charles's information you suffered losses in first place. Thus Charles is
totally liable for the damages.
Yours faithfully
XYZ
4.2
a) Case of Graham and Macho Men Plc
As per the given case, Macho Men Plc is being consider as liable for the act done by
Graham. Here, Graham has acted in this way with an aim to provide benefit to the company.
But, due to the applicability of Ex turpi causa, firm will not held liable for the payment of
damage to the affected party. Furthermore, yes I would reach in the different way with regard to
the question that had Graham has been expressively prohibited by the company from
manhandling troublesome customers. Because, if firm is restricting its employees from doing
certain act at that time it must not perform the specific type of act. Thus, in this case Graham's
employee will be held liable for his own act.
b) Case of Carla and Link Ltd
The Carla will be held liable for the damages of George's car as she was driving it during
the non working hour. Thus, Carla will be held responsible for her own injury. As a result of it
vicariously liability cannot be imposed by her upon Link Ltd.
CONCLUSION
It can be concluded that it is being required by the firm that it must gather the thorough
information with regard to varied elements of contract. This can be done in order to formulate
valid contract. In addition to this, by assessing the comparison which exist between tort liability
and contractual liability, different type of liability can be imposed by person as per the situation.
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REFERENCES
Books and Journals
Cartwright, J., 2011. Choice is good. Really. European Review of Contract Law. 7(2). pp 335.
Gray, J., 2010. Legal commentary. Journal of Financial Regulation and Compliance. 18(3).
pp.293-300.
Howells, G., 2011. European Contract Law Reform and European Consumer Law–Two Related
But Distinct Regimes. European Review of Contract Law. 7(2) pp173-194.
Koffman, L. and Macdonald, E., 2010. The law of contract. Oxford University Press.
Marson, J., 2011. Business Law. Oxford: OUP Oxford.
McKendrick, E., 2014. Contract law: text, cases, and materials. Oxford University Press.
Middlemiss, S., 2011. The psychological contract and implied contractual terms: Synchronous or
asynchronous models?. International Journal of Law and Management. 53(1). pp.32-50.
Robert, C. M., 2014. Common Law Environmental Protection: The Future of Private Nuisance,
Part I. International Journal of Law in The Built Environment. 6 (1/2). Pp.21 – 42.
Rosen, C. C. And et.al., 2009. Perceptions of the Organizational Context and Psychological
Contract Breach: Assessing Competing Perspectives. Organizational Behavior and
Human Decision Processes. 108(2). Pp.202-217.
Rowlinson, M., 2014. Compensation Events: Theory and Events. A Practical Guide to the NEC3
Engineering and Construction Contract. Pp151-170.
Stone, R. and Devenney, J., 2013. The modern law of contract. Routledge.
Treitel, H. G., 2002. Some landmarks of twentieth century contract law. Oxford University Press.
Tvarnø, C. D., 2010. 10 Law and regulatory aspects of public–private partnerships: contract law
and public procurement law. International Handbook on Public-Private Partnership.
pp.216.
Van der Puil, J. and Weele, A., 2014. International contracting. London: Imperial College Press.
Whittaker, S., 2005. Liability for products. Oxford: New York.
Online
Negligence. 2015. [Online] Available at: <http://e-lawresources.co.uk/Negligence.php>.
[Accessed On 4th December 2015].
Types of Contracts. 2015. [Online] Available at:
http://legal-dictionary.thefreedictionary.com/Types+of+Contracts [Accessed On 5th
December 2015].
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